Thursday, March 08, 2012

If the touted price tags for the power and gaming assets are true, Ananda would in less than two years managed to sell two of Tanjong’s prized assets for about RM12.85 billion — over RM4 billion or some 46% more money than the RM8.8 billion Tanjong valued using the RM21.80 per share minorities were bought-out for in July 2010.

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Secondly, Ananda’s investment cost is a lot less than the RM8.8 billion Tanjong was valued using the takeover price, as parties that offered to privatise Tanjong already had 49.96% of the group in hand .......

KUALA LUMPUR (March 8, 2012): In 2010, the country's second-richest man Ananda Krishnan took Tanjong plc private, valuing the company at RM8.8 billion. Barely two years down the road, he has made a massive gain by breaking up the company and selling it in chunks.

In a statement yesterday, 1Malaysia Development Bhd said it had agreed to pay RM8.5 billion for Tanjong Energy Holdings Sdn Bhd.

Ananda had already sold the group's gaming business under Pan Malaysian Pools Sdn Bhd for RM2.1 billion in August last year.

These transactions valued Tanjong plc's former assets at RM10.6 billion, and netted Ananda at least RM1.8 billion.
The reclusive tycoon built up his fortune through interests in hugely lucrative ventures ranging from power generation and gaming to exclusive satellite-TV operations, mobile communication, and a fleet of support vessels in the oil and gas industry.

His stable of listed companies on Bursa Malaysia includes Maxis Bhd and Bumi Armada Bhd.

Maxis was taken private, hived off its overseas operations and put back into the market as a Malaysia-only operation. Bumi Armada, too, was delisted and brought back to the market a different animal.

The latest sale will probably mark Ananda's exit from the power business.

Tanjong Energy has operations in six countries — Malaysia, Egypt, Bangladesh, Pakistan, Sri Lanka and the United Arab Emirates. It also has a water desalination capacity of 16 million imperial gallons per day.

Information on its website revealed it owns and operates eight power plants and has investment in five others. Total net power generating capacity stood at 3,951MW, with three of these plants in Malacca having a capacity to produce 1,490MW.

Ananda is one of the so-called first-generation independent power producers (IPPs), and had benefited tremendously from what was widely seen as a lopsided power purchase agreement that favours the generators.

Petronas on Tuesday said total subsidies, or forgone revenues, to IPPs had reached a staggering RM6.7 billion in 2011. Since 1997, total subsidies to the IPPs amounted RM62.4 billion.

It is unclear why the 74-year-old tycoon is selling some of his prized assets.

"Energy is one of the core focus areas for 1MDB, and Tanjong Energy is a prized acquisition,'' 1MDB CEO Shahrol Halmi said in a statement yesterday.

"We are attracted to the strong operating track record of Tanjong Energy, its well-diversified portfolio of quality assets, its strong in-house capabilities and the potential for new growth both here and abroad," he added.

Goldman Sachs (Malaysia) Sdn Bhd is the financial adviser to 1MDB for this transaction. The acquisition, 1MDB said, was subject to financing and regulatory approvals.

The announcement came following a definitive agreement signed between the two parties last Friday.

Shahrol said 1MDB aimed to further enhance the capacity of Tanjong Energy as a leading emerging market independent power producer.

"Given its unique private-public sector dynamics, 1MDB and Tanjong Energy are in a strong position to create new synergies, establish global strategic partnerships and promote innovations in green and sustainable technologies," he said.

Congratulations all minority shareholders who generously sold out all their shares during Tanjong privatisation. Without the shareholders selling out, this big payday might not happen! Bravo!

I wonder how these minority shareholders are feeling today. They sold their shares out because a said 'nice premium' was offered. So they sold out. But do they even know the true value of what they had sold? Would I be wrong to say that this is a perfect case of penny wise, pound foolish?

No wonder some say, the stock market is the best place to make money!

ps: I do like today's sun article a lot for stating what had happened in Maxis and Bumi Armada. Let me add in my version. Maxis was delisted at a cheap price and when it was relisted, it was relisted, Maxis only has its Malaysian operations. Gone was the massive investment made by Maxis in India. Bumi Armada? Bumi Armada was delisted in an obscene cheap valuation.